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jerryking : contra-amazon   24

A ‘Grass Roots’ Campaign to Take Down Amazon Is Funded by Amazon’s Biggest Rivals - WSJ
Sept. 20, 2019 | WSJ | By James V. Grimaldi.

Walmart, Oracle and mall owner Simon Property Group are secret funders behind a nonprofit that has been highly critical of the e-commerce giant

About 18 months ago a new nonprofit group called Free and Fair Markets Initiative launched a national campaign criticizing the business practices of one powerful company: Amazon.com Inc. AMZN -1.50%

Free and Fair Markets accused Amazon of stifling competition and innovation, inhibiting consumer choice, gorging on government subsidies, endangering its warehouse workers and exposing consumer data to privacy breaches. It claimed to have grass-roots support from average citizens across the U.S, citing a labor union, a Boston management professor and a California businessman.

What the group did not say is that it received backing from some of Amazon’s chief corporate rivals. They include shopping mall owner Simon Property Group Inc., SPG 0.27% retailer Walmart Inc. WMT -0.11% and software giant Oracle Corp. ORCL 0.19% , according to people involved with and briefed on the project. Simon Property is fighting to keep shoppers who now prefer to buy what they need on Amazon; Walmart is competing with Amazon over retail sales; and Oracle is battling Amazon over a $10 billion Pentagon cloud-computing contract.

The grass-roots support cited by the group was also not what it appeared to be. The labor union says it was listed as a member of the group without permission and says a document purporting to show that it gave permission has a forged signature. The Boston professor says the group, with his permission, ghost-wrote an op-ed for him about Amazon but that he didn’t know he would be named as a member. The California businessman was dead for months before his name was removed from the group’s website this year.

Free and Fair Markets, or FFMI, declined to reveal its funders or disclose if it has directors or a chief executive.

“The bottom line is that FFMI is focusing on the substantive issues and putting a spotlight on the way companies like Amazon undermine the public good—something that media outlets, activists, and politicians in both parties are also doing with increasing frequency,” it said in a statement in response to questions from The Wall Street Journal. “If Amazon can not take the heat then it should stay out of the kitchen.”

The creation of a group aimed solely at Amazon is an indication of the degree to which competing companies have coalesced to counter the growing and accumulated power of Amazon and how far competitors are increasingly willing to go to counter-strike. Lobbyists that exaggerate the extent of their grass-roots support—a practice known as “AstroTurf lobbying”—are common in Washington, but it is rare for a nonprofit group to be created for the sole purpose of going after a single firm.

Amazon is facing additional opaque opposition as well, with websites and articles popping up portraying the software giant as the Evil Empire. The website Monopolyamazon.com, which does not disclose who is behind it and registered its web address anonymously, includes a handful of articles calling on the Defense Department to reject Amazon’s bid for a $10 billion cloud-computing contract. For months last year, an anti-Amazon dossier circulated in Washington alleging conflicts of interest in the Pentagon procurement process and a chart from the document later reached President Trump before he asked for a review of the Amazon bid.

Free and Fair Markets is run by a strategic communications firm, Marathon Strategies, that works for large corporations, including Amazon rivals. Marathon founder Phil Singer is a veteran political operative who has worked as a top aide to prominent Democrats, including Sen. Chuck Schumer of New York and on Hillary Clinton ’s 2008 presidential campaign.

In a statement, Mr. Singer defended the group. “FFMI is not obligated to disclose its donors and it does not,” Mr. Singer said.

Marathon initially asked for a fee of $250,000 per company to fund the anti-Amazon group, according to a person at one of the companies approached. Among those invited to fund the group but declined were a trade association that includes members who compete with Amazon, and International Business Machines Corp. , according to people familiar with the contacts. IBM, which declined to comment, previously was a client of Marathon.

In a statement, Amazon said, “The Free & Fair Markets Initiative appears to be little more than a well-oiled front group run by a high-priced public affairs firm and funded by self-interested parties with the sole objective of spreading misinformation about Amazon.”

Simon Property, the world’s largest mall landlord, declined to comment. Simon does not have any brick-and-mortar Amazon stores in its roughly 200 malls, outlets and open-air centers in the U.S., whereas its peers with smaller portfolios count multiple Amazon stores in theirs. The Indianapolis-based landlord recently launched its own online shopping platform, Shoppremiumoutlets.com.

Walmart funds the organization indirectly by paying an intermediary that pays for Free and Fair Markets, according to sources familiar with the arrangement. Walmart is a client of Marathon.

Walmart spokesman Randy Hargrove said, “We are not financial supporters of the FFMI but we share concerns about issues they have raised.” Mr. Hargrove declined to comment further.

The group’s aim is to sully Amazon’s image on competition, data-security and workplace issues, while creating a sense of grass-roots support for increased government regulatory and antitrust enforcement, according to people familiar with the campaign.

Free and Fair Markets has lobbied the government for legislation and investigations of Amazon, sent dozens of letters and reports to Congress and staff, according to congressional staffers, published scores of op-eds in local and online media and tweeted hundreds of social media posts blasting Amazon.

Over the past year, many of the actions advocated by the group have gained traction. Amazon has come under increasing antitrust scrutiny from the Department of Justice, Federal Trade Commission, states attorneys general and the European Union. In New York, Amazon backed out of plans to open a second headquarters in Long Island City after facing political opposition. Free and Fair Markets campaigned against government subsidies to support the site and tweeted more than 300 times on the topic.

Oracle provided financial support as part of an all-out strategy to stop Amazon from getting a $10 billion mega-contract to handle cloud computing for the Defense Department. The Pentagon eliminated Oracle as a bidder in the first round. Kenneth Glueck, who runs Oracle’s office in Washington, confirmed that the computer technology firm has contributed to the effort.

A goal of the organization was achieved in July when President Trump said he wanted to conduct a review of the contract. In August, the secretary of defense said he was investigating conflict-of-interest allegations surrounding the $10 billion contract known as Joint Enterprise Defense Infrastructure, or JEDI. At the urging of President Trump, the bid award has been put on hold during the review.

Mr. Trump, a frequent critic of Amazon, cited complaints about the project from several of Amazon’s competitors, which in addition to Oracle included IBM and Microsoft Corp. , saying he had heard the contract “wasn’t competitively bid.” The contract has not been awarded and Microsoft remains one of the two remaining bidders.

Though Free and Fair Markets has contacted members of Congress and the administration, it has not registered as a lobbying organization. Such groups are required to file with Congress if more than 20% of their work involves lobbying. Marathon said it complies with lobby disclosure rules.

None of the articles notes that Mr. Engel’s group is funded by rivals of Amazon.

A spokeswoman for The Hill said the publication was unaware of the funding sources and failure to disclose such payments violates a standard written agreement all op-ed writers are required to sign.

Sandy Shea, managing editor of opinion for the Inquirer’s parent company, the Philadelphia Media Network, said, “We aren’t equipped to investigate the makeup or structure of a nonprofit that submits a piece.”

Bill Zeiser, RealClearPolicy editor, said RealClearMedia publishes “commentary on politics and public policy from a wide array of sources. These submissions are assessed on their editorial merits.”

Representatives of the Post-Gazette and Chronicle did not respond to emails.

In an interview earlier this year, Mr. Engel said the motive of the group was not to promote the views of Amazon’s rivals. He said Amazon has been the only target because its business tactics run counter to the group’s goal of free and fair markets. “The one organization that feels it stands above that is Amazon,” Mr. Engel said.

Marathon did not make Mr. Engel available for comment a second time after the Journal determined that rivals were funding the group.

Mr. Engel and his group have been quoted in publications, including once each in The Wall Street Journal and The New York Times. None said who funded the group.

One article about Free and Fair Markets was commissioned by Marathon.

Last October, an Iowa writer and consultant, Jeff Patch, published an article on RealClearPolicy.com, a news website known for political coverage, about a report by Free and Fair Markets critical of Amazon’s record of hiring and firing women. “Many [women] were fired after Amazon concocted pretexts for their terminations,” Mr. Patch wrote.

Mr. Patch, who has worked as a journalist and a staffer for a Republican congressman and conservative think tanks, did not disclose in his article at the time that he was a paid contractor for Marathon.

Bank statements and invoices reviewed by the Journal show that Mr. Patch billed Marathon, and was paid thousands of dollars… [more]
Amazon  clandestine  contra-Amazon  countermeasures  counternarratives  dark_side  e-commerce  grass-roots  lobbying  lobbyists  nonprofit  Oracle  Simon_Properties  sophisticated  Wal-Mart 
september 2019 by jerryking
Everything still to play for with AI in its infancy
February 14, 2019 | Financial Times | by Richard Waters.

the future of AI in business up for grabs--this is a clearly a time for big bets.

Ginni Rometty,IBM CEO, describes Big Blue’s customers applications of powerful new tools, such as AI: “Random acts of digital”. They are taking a hit-and-miss approach to projects to extract business value out of their data. Customers tend to start with an isolated data set or use case — like streamlining interactions with a particular group of customers. They are not tied into a company’s deeper systems, data or workflow, limiting their impact. Andrew Moore, the new head of AI for Google’s cloud business, has a different way of describing it: “Artisanal AI”. It takes a lot of work to build AI systems that work well in particular situations. Expertise and experience to prepare a data set and “tune” the systems is vital, making the availability of specialised human brain power a key limiting factor.

The state of the art in how businesses are using artificial intelligence is just that: an art. The tools and techniques needed to build robust “production” systems for the new AI economy are still in development. To have a real effect at scale, a deeper level of standardisation and automation is needed. AI technology is at a rudimentary stage. Coming from completely different ends of the enterprise technology spectrum, the trajectories of Google and IBM highlight what is at stake — and the extent to which this field is still wide open.

Google comes from a world of “if you build it, they will come”. The rise of software as a service have brought a similar approach to business technology. However, beyond this “consumerisation” of IT, which has put easy-to-use tools into more workers’ hands, overhauling a company’s internal systems and processes takes a lot of heavy lifting. True enterprise software companies start from a different position. They try to develop a deep understanding of their customers’ problems and needs, then adapt their technology to make it useful.

IBM, by contrast, already knows a lot about its customers’ businesses, and has a huge services operation to handle complex IT implementations. It has also been working on this for a while. Its most notable attempt to push AI into the business mainstream is IBM Watson. Watson, however, turned out to be a great demonstration of a set of AI capabilities, rather than a coherent strategy for making AI usable.

IBM has been working hard recently to make up for lost time. Its latest adaptation of the technology, announced this week, is Watson Anywhere — a way to run its AI on the computing clouds of different companies such as Amazon, Microsoft and Google, meaning customers can apply it to their data wherever they are stored. 
IBM’s campaign to make itself more relevant to its customers in the cloud-first world that is emerging. Rather than compete head-on with the new super-clouds, IBM is hoping to become the digital Switzerland. 

This is a message that should resonate deeply. Big users of IT have always been wary of being locked into buying from dominant suppliers. Also, for many companies, Amazon and Google have come to look like potential competitors as they push out from the worlds of online shopping and advertising.....IBM faces searching questions about its ability to execute — as the hit-and-miss implementation of Watson demonstrates. Operating seamlessly in the new world of multi-clouds presents a deep engineering challenge.
artificial_intelligence  artisan_hobbies_&_crafts  automation  big_bets  brainpower  cloud_computing  contra-Amazon  cultural_change  data  digital_strategies  early-stage  economies_of_scale  Google  hit-and-miss  IBM  IBM_Watson  internal_systems  randomness  Richard_Waters  SaaS  standardization 
february 2019 by jerryking
A Year After Amazon Devoured Whole Foods, Rivals Are Pursuing Countermoves - WSJ
By Heather Haddon
June 10, 2018

Amazon.com Inc.’s AMZN +0.30% year-old acquisition of Whole Foods is prompting the food industry to retool how it sells fresh food to consumers....The deal has been “shaking up the food industry from top to bottom,” said Angela Spivey, a food-and-beverage attorney at McGuireWoods LLP, who is advising clients on how to quickly change their packaging and marketing to sell at Amazon and Whole Foods. “Don’t be surprised if the milk and cereal just shows up at your door based on your usual eating habits.”

Food retailers, manufacturers and other suppliers have begun to make fundamental changes to their selling strategies, driven partly by stronger sales and delivery from Whole Foods stores since the acquisition.....Grocery chains have accelerated planned investments in online delivery and pickup services, in some cases bumping plans ahead to two- to three-year timelines instead of five to seven years, .......Dozens of supermarkets have struck deals with Instacart Inc., an online grocery-delivery service that has expanded to more than 200 retailers from 30 before Amazon’s deal. .......After Amazon extended discounts at Whole Foods to Prime members—which will help it gather data about shoppers’ preferences—analysts said competitors might need to update their own shopper-loyalty programs. Amazon now offers free, two-hour delivery and additional 10% discounts on several hundred items for Prime members in select areas.

Many food makers are redesigning their packaging and formulas to better sell through Amazon and Whole Foods, placing an emphasis on online repeat purchases instead of impulse buys, industry consultants said......Whole Foods has focused on getting competitive on staples, said Guillaume Bacuvier, chief executive of Dunnhumby, an international retail consulting and technology firm that Whole Foods hired to help improve consumer analytics.
Amazon  Amazon_Prime  BOPIS  contra-Amazon  Dunnhumby  food  grocery  Instacart  perishables  supermarkets  Whole_Foods 
june 2018 by jerryking
‘You’re Stupid If You Don’t Get Scared’: When Amazon Goes From Partner to Rival - WSJ
By Jay Greene and Laura Stevens
June 1, 2018

The data weapon
One Amazon weapon is data. In retail, Amazon gathered consumer data to learn what sold well, which helped it create its own branded goods while making tailored sales pitches with its familiar “you may also like” offer. Data helped Amazon know where to start its own delivery services to cut costs, an alternative to using United Parcel Service Inc. and FedEx Corp.

“In many ways, Amazon is nothing except a data company,” said James Thomson, a former Amazon manager who advises brands that work with the company. “And they use that data to inform all the decisions they make.”

In web services, data across the broader platform, along with customer requests, inform the company’s decisions to move into new businesses, said former Amazon executives.

That gives Amazon a valuable window into changes in how corporations in the 21st century are using cloud computing to replace their own data centers. Today’s corporations frequently want a one-stop shop for services rather than trying to stitch them together. A food-services firm, say, might want to better track data it collects from its restaurants, so it would rent computing space from Amazon and use a data service offered by a software company on Amazon’s platform to better analyze what customers order. A small business might use an Amazon partner’s online services for password and sign-on functions, along with other business-management programs.
21st._century  Amazon  AWS  brands  cloud_computing  contra-Amazon  coopetition  data  data_centers  data_collection  data_driven  delivery_services  fear  new_businesses  one-stop_shop  partnerships  platforms  private_labels  rivalries  small_business  strengths  tools  unfair_advantages 
june 2018 by jerryking
The case for ending Amazon’s dominance
January 18, 2018 FT | Tim Harford.

Amazon offers:
* consumers, choice and convenience and a shopping search engine that is Google’s only serious rival,
* start-ups cheap, flexible cloud computing services to start and scale up.
competitors, e.g. Walmart tough competition,
* television networks, a tough competitor,
* Apple loyalists, a competing tablet computers at a price to make stop and think.

economists argue that corporate America is underinvesting.....rather than take a long-term view.......Amazon should be the shining counterexample....The online retailer’s strategy is driven not by short-term profit but by investment, innovation and growth. If only there were a few more companies like Amazon, capitalism would be in a happier spot. But there’s the rub: there aren’t more companies like it. It’s unique, and an increasingly terrifying force in online commerce. Should regulators act? If so, how?....

Begin by disposing of a poor argument: that Amazon must be challenged because it makes life miserable for its competitors, some of which are plucky mom-and-pop operations. However emotionally appealing this might seem, it should not be the business of regulators to prop up such businesses......Antitrust authorities should not be in the business of making life easy for incumbents. What, then, should they do? There are two schools of thought. One is to focus on consumers’ interest in quality, variety and price. This has been the standard approach in US antitrust policy for several decades. Since Amazon makes slim profits and charges low prices, it raises few antitrust questions.

The alternative view — which harks back to an earlier era of antitrust during which Standard Oil and later AT&T were broken up — argues that competition is inherently good even if it is hard to quantify a benefit to consumers and that society should be wary of large or dominant companies even if their behaviour seems benign. ....The narrowing in antitrust thinking is described by Lina Khan in a much-read article, “Amazon’s Antitrust Paradox”. Ms Khan berates modern antitrust thinking for its “hostility to false positives”.....Tim Harford disagrees, he shares modern antitrust’s hostility to false positives; there is a real cost to cumbersome and unnecessary meddling in a dynamic and rapidly evolving marketplace. US president Donald Trump’s history of publicly attacking Mr Bezos is worth pondering too: Harford asks, "do we really want the US government to have more discretion as to who is targeted, and why?"....Yet for all this,Tim Harford remains deeply uneasy about Amazon’s apparently unassailable position in online retail. Yes, customers are being well served at the moment. Yet the company has acquired formidable entrenched advantages, from the information about customers and the suppliers who sell through it, to the bargaining power it has over delivery companies, to the vast network of warehouses. Those advantages were earned, but they can also be abused.

Antitrust authorities face a difficult balancing act. Regulate Amazon and you may snuff out the innovation that we all say we want more of. Punish it for success and you send a strange message to entrepreneurs and investors. Ignore it and you risk leaving vital services in the hands of an invincible monopolist.

There are no easy options, but it is time to look for a way to split Amazon into two independent companies, each with the strength to grow and invest. If Amazon is such a wonderful company, wouldn’t two Amazons be even better?
Amazon  antitrust  AWS  contra-Amazon  competition  regulators  informational_advantages  Lina_Khan  mom-and-pop  platforms  predatory_practices  Tim_Harford 
january 2018 by jerryking
The Limits of Amazon
Jan. 1, 2018 | WSJ | By Christopher Mims.

Amazon’s core mission as a data-driven instant-gratification company. Its fanaticism for customer experience is enabled by every technology the company can get its hands on, from data centers to drones. Imagine the data-collecting power of Facebook wedded to the supply-chain empire of Wal-Mart—that’s Amazon.

There is one major problem with the idea that Amazon-will-eat-the-entire-universe, however. Amazon is good at identifying commodity products and making those as cheap and available as possible. “Your margin is my opportunity” is one of Chief Executive Jeff Bezos’s best-known bon mots. But this system isn’t very compatible with big-ticket, higher-margin items.....

How Amazon Does It
Amazon now increasingly makes its money by extracting a percentage from the sales of other sellers on its site. It has become a platform company like Facebook Inc. or Alphabet Inc.’s Google, which serve as marketplaces for businesses with less reach of their own.....Eventually, Amazon could become the ultimate platform for retail, the “retail cloud” upon which countless other online retail businesses are built....Think of Amazon as an umbrella company composed of disconnected and sometimes competing businesses, though critically they can access common infrastructure, including the retail platform and cloud services.

Ultimately, these smaller businesses must feed the core mission. Amazon’s video business isn’t just its own potential profit center; it’s also a way to keep people in Amazon’s world longer, where they spend more money,

What Amazon Can’t Do
Ultimately, the strategies that allow Amazon to continue growing will also be its limitation. “If the platform needs to be one-size-fits-all across many, many different product categories, it becomes difficult to create specific experiences for different kinds of products,”
contra-Amazon  Amazon  strengths  data_driven  instant_gratification  customer_experience  platforms  one-size-fits-all  limitations  Jeff_Bezos  weaknesses  commoditization  third-party  Christopher_Mims 
january 2018 by jerryking
How Retailers Can Thrive in the Age of Amazon - WSJ
By Stephen Moore
Dec. 15, 2017

How can a retailer flourish in such a daunting environment? By providing “emotional fulfillment,” = the joy customers take in seeing, touching, sniffing and testing the product before they pull out the credit card. A computer can’t match that experience...“We are social animals. We aren’t robots who are going to make all our purchases from robots.”

Somewhat counterintuitively....e-commerce is “not our enemy” but is becoming complementary to retail. Here’s his challenge to anyone who thinks digital sales are set to crush the old analog kind: ...If that isn’t enough, he adds: “Guess what’s one of our most successful stores we just opened up three months ago? Amazon. They already mastered online book sales. Why are they creating a physical presence? Because they know they need to connect and fuse with you as a consumer.” That’s what he means by emotional fulfillment.

He sketches out a strategy for retail in the digital age. It starts with making the mall an appealing place to visit. Parking is free, he says, and the stores are full of helpful employees. “We tell our retailers that one of the primary value added of retail shopping is the expertise that the salesclerks can offer customers,” he says, “They better be knowledgeable about what they are selling, or people will go online or to a discount store.” He urges his tenants to pay well more than the minimum wage to attract better employees, and he says most of them do
retailers  Amazon  contra-Amazon  shopping_malls  e-commerce  bricks-and-mortar  emotional_connections 
january 2018 by jerryking
Costco Is Surviving in the Age of Amazon
By DAREN FONDA, Senior Associate Editor
From Kiplinger's Personal Finance, July 2017
Amazon  contra-Amazon  Costco  big-box  e-commerce 
september 2017 by jerryking
Retailers must innovate and adapt to thrive in the age of Amazon
JUNE 26, 2017 | The Globe and Mail | HARVEY SCHACHTER.

Mr. Stephens does not believe we are seeing the death of retail. But we will need to see retail's reinvention, and soon. At the core will have to be the understanding that we don't need physical stores for distribution of goods, as Amazon has shown. But we will need them for experiences.

To his mind, Amazon is actually not a retailer. It's a data technology and innovation company that succeeds by ignoring the conventional wisdom of retailing and following its own ways. He notes that last year Macy's CEO Terry Lundgren said that while Amazon might pose some threat in apparel sales it would suffer because it was not prepared to handle complexities such as returns of items. But to Amazon, that's just another challenge to be handled by data and technology, as it is showing. When Amazon opened a physical store, it looked at retail through its own eyes and, in an age of mobile devices, eliminated cash registers, checkouts and lineups.

"But Amazon does not want to play in the physical experiences arena. They want to take the friction out of the equation. So if retailers can make the experiences in their stores rich, they can gain an edge," says Mr. Stephens. But most, of course, aren't all that effective for now, even at a basic level of romancing the customer, let alone the redesigned future he is calling for, where stores are redesigned around experiencing the product under consideration.
retailers  innovation  Amazon  Harvey_Schachter  experiential_marketing  Doug_Stephens  emotional_connections  contra-Amazon  slight_edge  physical_experiences 
september 2017 by jerryking
Best Buy’s Secrets for Thriving in the Amazon Age
SEPT. 18, 2017 | The New York Times | By KEVIN ROOSE.

Here are the keys to Best Buy’s turnaround, according to Mr. Joly:

1. Price, price, price

The most worrisome trend in big-box retail was “showrooming” .....To combat showrooming and persuade customers to complete their purchases at Best Buy, Mr. Joly announced a price-matching guarantee....Price-matching costs Best Buy real money, but it also gives customers a reason to stay in the store, and avoids handing business to competitors.

2. Focus on humans

Mr. Joly also realized that if Best Buy was going to compete with Amazon, which has spent billions building a speedy delivery system and plans to use drones to become even more efficient, it needed to get better at things that robots can’t do well — namely, customer service & customer experience....Best Buy fixed its internal product search engine. It also restored a much-loved employee discount that had been suspended and embarked on an ambitious program to retrain its employees so they could answer questions about entirely new categories of electronics, such as virtual reality headsets and smart home appliances.....Customers had always loved Best Buy’s Geek Squad.....sometimes, people needed help before they bought big and expensive gadgets. So it started an adviser program that allows customers to get free in-home consultations about what product they should buy, and how it should be installed....a pilot program last year, the service is now being rolled out nationwide.

3. Turn brick-and-mortar into showcase-and-ship

Best Buy’s online ordering system was completely divorced from its stores. If a customer placed an order on the website, it would ship from a central warehouse. If that warehouse didn’t have the item in stock, the customer was out of luck.....Mr. Joly realized that with some minor changes, each of Best Buy’s 1,000-plus big-box stores could ship packages to customers, serving as a mini warehouse for its surrounding area. Now, when a customer orders a product on Best Buy’s website, the item is sent from the location that can deliver it the fastest — a store down the street, perhaps, or a warehouse five states away. It was a small, subtle change, but it allowed Best Buy to improve its shipping times, and made immediate gratification possible for customers. Now, roughly 40 % of Best Buy’s online orders are either shipped or picked up from a store.

Best Buy also struck deals with large electronics companies like Samsung, Apple and Microsoft to feature their products in branded areas within the store. Now, rather than jamming these companies’ products next to one another on shelves, Best Buy allows them to set up their own dedicated kiosks. (Apple’s area inside a Best Buy, for example, has the same sleek wooden tables and minimalist design as an Apple Store.) It’s a concept borrowed from department stores, and it’s created a lucrative new revenue stream. Even Amazon has set up kiosks in Best Buy stores to show off its voice-activated Alexa gadgets.

4. Cut costs quietly

Almost every business turnaround plan includes cutting costs. Best Buy has used the scalpel as quietly as possible, gradually letting leases expire for unprofitable stores and consolidating its overseas divisions, trimming a layer of middle managers in 2014, and reassigned roughly 400 Geek Squad employees within the company. No public rounds of layoffs, which can crater employee morale and create a sinking-ship vibe.

Best Buy has also found more creative penny-pinching methods. Once, the company noticed that an unusually high number of flat-screen TVs were being dropped in its warehouses. It revamped the handling process, reducing the number of times TVs were picked up by a clamp lift and adding new carts to prevent TV boxes from falling over. The changes resulted in less broken inventory and bigger profits.

5. Get lucky, stay humble and don’t tempt fate

It’s lucky that the products it specializes in selling, like big-screen TVs and high-end audio equipment, are big-ticket items that many customers still feel uncomfortable buying sight unseen from a website. It’s lucky that several large competitors have gone out of business, shrinking its list of rivals. And it’s lucky that the vendors who make the products it sells, like Apple and Samsung, have kept churning out expensive blockbuster gadgets.

“They’re at the mercy of the product cycles,” said Stephen Baker, a tech industry analyst at NPD Group. “If people stop buying PCs or they don’t care about big-screen TVs anymore, they have a challenge.”

Mr. Joly knows that despite Best Buy’s recent momentum, it’s not out of the woods yet. To succeed over the long term, it will need to do more than cut costs and match prices. Walmart, another big-box behemoth, is investing billions of dollars in a digital expansion with the acquisition of e-commerce companies like Jet and Bonobos, and could prove to be a fierce rival. Amazon has been expanding into brick-and-mortar retail with its acquisition of Whole Foods, and is moving into Best Buy’s home installation and services market....
“Once you’ve had a near-death experience,” he said, “arrogance, if you had it in your bones, has disappeared forever.”
Amazon  Best_Buy  big-box  CEOs  turnarounds  pilot_programs  nationwide  contra-Amazon  brands  kiosks  cost-cutting  luck  Wal-Mart  Jet  Bonobos  pricing  showrooming  price-matching  customer_service  search_engines  in-home  BOPIS  Samsung  Apple  Microsoft  store_within_a_store  consumer_electronics  product_cycles  customer_experience 
september 2017 by jerryking
The Retailers That Can Resist the Amazon Onslaught
AUG. 28, 2017 | The New York Times | By JENNIFER SABA.

The Amazon vortex won’t suck in everyone. That’s the verdict of investors in the retail sector.

Among potential competitors to the e-commerce juggernaut founded by Jeff Bezos, some – including Ross Stores, Home Depot and AutoZone – may have the wherewithal to withstand Amazon. The market is conferring on them valuations commensurate with, or better than, the one accorded to Amazon.........The auto-parts chain AutoZone may represent another retail slice that is somewhat resistant to Amazon. The $19 billion company trades at 1.5 times 2020 sales, a recognition that it has created a supply chain that minimizes inventory without crimping a timely ability to fulfill customer orders.

Even in apparel, there are bright spots. At 1.4 times projected 2020 sales, Ross Stores, which sells reasonably priced clothing through more than 1,500 outlets, fetches an enterprise valuation close to Amazon’s. TJX Companies, operator of TJ Maxx and Marshalls, lingers at 1.1 times sales. That’s below Amazon but well above peers like Macy’s and Kohl’s. Bargain hunting may offer some respite from online price choppers...........Once he is done crushing the grocery business, Mr. Bezos may seriously set Amazon’s sights on car parts, cheap clothes and home-improvement accessories. For now, though, the market is betting on a few pockets of calm.
retailers  bargain_hunting  e-commerce  Whole_Foods  competitive_landscape  apparel  Home_Depot  AutoZone  valuations  Amazon  home-improvement  contra-Amazon 
august 2017 by jerryking
The Future of Shopping
Darrell K. Rigby
FROM THE DECEMBER 2011 ISSUE

omnichannel retailing. The name reflects the fact that retailers will be able to interact with customers through countless channels—websites, physical stores, kiosks, direct mail and catalogs, call centers, social media, mobile devices, gaming consoles, televisions, networked appliances, home services, and more.......The experience of shopping.
Traditional retailers have suffered more than they probably realize at the hands of Amazon and other online companies. As volume trickles from the stores and sales per square foot decline, the response of most retailers is almost automatic: Cut labor, reduce costs, and sacrifice service. But that only exacerbates the problem. With even less service to differentiate the stores, customers focus increasingly on price and convenience, which strengthens the advantages of online retailers.

If traditional retailers hope to survive, they have to turn the one big feature that internet retailers lack—stores—from a liability into an asset.
retailers  future  HBR  omnichannel  bricks-and-mortar  downward_spirals  experiential_marketing  contra-Amazon  hourly_workers  sales_per_square_foot 
august 2017 by jerryking
Now at Saks: Salt Rooms, a Bootcamp and a Peek at Retail’s Future - The New York Times
By DAVID GELLES AUG. 4, 2017

Venerable department store was dealing with the upheavals throttling the retail industry. As stores around the country reckon with Amazon.com, discount chains and changing consumer habits, they are turning to “experiential” offerings that entice people to enter their doors..... “Selling stuff in stores is not the answer,” he said. “You have to build an emotional connection with them. Where else can you take a fitness class and buy a Chanel handbag?”

It isn’t clear how many of Saks’s discerning clientele are actually interested in getting a lemon scrub after purchasing a $5,100 Alexander McQueen dress. During multiple visits over the past week, The Wellery was sparsely populated.
retailers  Saks  shareholder_activism  future  department_stores  experiential_marketing  wellness  Nordstrom  Macy's  emotional_connections  experimentation  bootcamps  Amazon  shifting_tastes  contra-Amazon  dislocations 
august 2017 by jerryking
Three Hard Lessons the Internet Is Teaching Traditional Stores
April 23, 2017 | WSJ | By Christopher Mims.
Legacy retailers have to put their mountains of purchasing data to work to create the kind of personalization and automation shoppers are getting online
(1) Data Is King
When I asked Target, Walgreens and grocery chain Giant Food about loyalty programs and the fate of customers’ purchasing data—which is the in-store equivalent of your web browsing history—they all declined to comment. ...Data has been a vital part of Amazon’s retail revolution, just as it was with Netflix ’s media revolution and Google and Facebook ’s advertising revolution. For brick-and-mortar retailers, purchasing data doesn’t just help them compete with online adversaries; it has also become an alternate revenue source when profit margins are razor-thin. ....Physical retailers must catch up to online retailers in collecting rich data without making it feel so intrusive. Why, exactly, does my grocery store need my phone number?

(2) Personalization + Automation = Profits
Personalization and Automation = Profits
There’s a debate in the auto industry: Can Tesla get good at making cars faster than Ford, General Motors and Toyota can get good at making self-driving electric vehicles? The same applies to retail: Can physical retailers build intimate digital relationships with their customers—and use that data to update their stores—faster than online-first retailers can learn how to lease property, handle inventory and manage retail workers? [the great game ]

Online retailers know what’s popular, and how customers who like one item tend to like certain others. So Amazon’s physical bookstores can put out fewer books with more prominently displayed covers. Bonobos doesn’t even sell clothes in its stores, which it calls “guideshops.” Instead, customers go there to try clothes on, and their selections are delivered through the company’s existing e-commerce system.

Amazon’s upcoming Go convenience stores, selling groceries and meal kits, don’t require cashiers. That’s the sort of automation that could position Amazon to reap margins—or slash prices—to a degree unprecedented for retailers in traditionally low-margin categories like food and packaged goods.

While online retailers are accustomed to updating inventory and prices by the hour, physical retailers simply don’t have the data or the systems to keep up, and tend to buy and stock on cycles as long as a year, says George Faigen, a retail consultant at Oliver Wyman. Some legacy retailers are getting around this by teaming up with online players.

Target stocks men’s shaving supplies from not one but two online upstarts, Harry’s and Bevel. Target has said that, as a result, more customers are coming in to buy razors, increasing the sales of every brand on that aisle—even good old Gillette. Retailers have long relied on manufacturers to drive customers to stores by marketing their goods and even managing in-store displays. The difference is this: In the past, new brands had to persuade store buyers to dole out precious shelf space; now the brands can prove themselves online first.

(3) Legacy Tech Won’t Cut It

Perhaps the biggest challenge for existing retailers, says Euromonitor’s Ms. Grant, is finding the money to transition to this hybrid online-offline model. While Target has announced it will spend $7 billion over the next three years to revamp its stores, investors fled the stock in February after Target reported 2017 profits might be 25% less than expected.

When Warby Parker, the online eyeglasses retailer, set out to launch stores across the U.S., the company looked for in-store sales software that could integrate with its existing e-commerce systems. It couldn’t find a system up to the task, so it built one from scratch.

These kinds of systems allow salespeople to know what customers have bought both online and off, and what they might be nudged toward on that day. “We call it the ‘point of everything’ system,” says David Gilboa, co-founder and co-chief executive.

Having this much customer knowledge available instantly is critical, but it’s precisely what existing retailers struggle with, Mr. Faigen says.

Even Amazon is experiencing brick-and-mortar difficulties. In March, The Wall Street Journal reported that the Go stores would be delayed because of kinks in the point-of-sale software system.

Andy Katz-Mayfield, co-founder and co-chief executive of Harry’s, is skeptical that traditional retailers like Wal-Mart can make the leap, even if they invest heavily in technology.

The problem, he says, is that selling online isn’t just about taking orders through a website. Companies that succeed are good at selling direct to consumers—building technology from the ground up, integrating teams skilled at navigating online marketing’s ever-shifting terrain and managing the experience through fulfillment and delivery, Mr. Katz-Mayfield says.

That e-commerce startups are so confident about their own future doesn’t mean they are right about the fate of traditional retailers, however.

A report from Merrill Lynch argues Wal-Mart is embarking on a period of 20% to 30% growth for its e-commerce business. A spokesman for the company said that in addition to acquisitions, the company is focused on growing its e-commerce business organically.

It isn’t hard to picture today’s e-commerce companies becoming brick-and-mortar retailers. It’s harder to bet on traditional retailers becoming as tech savvy as their e-competition.[the great game]
lessons_learned  bricks-and-mortar  retailers  curation  personalization  e-commerce  shopping_malls  automation  privacy  Warby_Parker  Amazon_Go  data  data_driven  think_threes  Bonobos  Amazon  legacy_tech  omnichannel  Harry’s  Bevel  loyalty_management  low-margin  legacy_players  digital_first  Tesla  Ford  GM  Toyota  automobile  electric_cars  point-of-sale  physical_world  contra-Amazon  brands  shelf_space  the_great_game  cyberphysical  cashierless  Christopher_Mims  in-store  digital_savvy 
april 2017 by jerryking
Retailers compete with Amazon: Lowes Foods
July 11, 2014 | CNBC | Kristina Yates.

"What do we do to survive?" That's the No. 1 question branding expert Martin Lindstrom gets from his clients, brick-and-mortar stores.

Lindstrom's answer: entertainment. Create an "in-store sensory experience, and a sense of community, that can't be packaged and delivered by mail, or perhaps by drone in the future," "We have five senses that we can appeal to. When you go to Amazon, you have a maximum of appealing to two senses."

Appealing to all the senses is a concept that Lowes Foods, a 99-location grocery chain across the Carolinas and Virginia, is embracing wholeheartedly. The company hired Lindstrom and his team to give its traditional stores a makeover.
......
The store in Clemmons, North Carolina—ground zero for the chain's reinvention of the grocery shopping experience—doesn't look like a traditional supermarket. On the outside, it looks more like a greenhouse. On the inside, it's a mix of farmer's market and theme park.

"It's an experience. It feels like a destination, like we're going to Disneyworld," said long-time customer Mike Parnitzke.

Lindstrom hired writers from Walt Disney to create a storyline throughout the store. The most visual and unique example of that philosophy is the "Chicken Kitchen," where each chicken is celebrated with a chicken dance when it comes out of the rotisserie oven. Then there's "Sausageworks," which looks like a crazy laboratory complete with a crazy sausage professor, concocting whacky sausage flavors like the "Star Spangler," a bacon cheddar cheeseburger sausage for the Fourth of July. The "Beer Den" lets customers sample local draft beers. There's also the community table, hosting events from recipe sharing to speed dating.

"It's really about finding a connection with the guest. To have them come back and say, 'Oh my gosh, I had so much fun here in your store,'" said store manager Kate Allred...... brick-and-mortar stores have to create a memorable experience if they want to retain customers. "Brick-and-mortar stores are not necessarily going away," she said, "but we know that 20 percent of all specialty retail spending is done online."

According to the Food Marketing Institute, consumers spent $5.8 billion online grocery shopping in 2012. It's an industry that is attracting heavyweights like Amazon and Wal-Mart, and already has established players like Peapod.com, Freshdirect.com and Harris Teeter.

"You can't compete on volume, you can't compete on prices because the online retailer will always win," said Lindstrom.

Lowes Foods' new, rebranded store has seen basket size rise 7 percent and transaction volume increase 23 percent since January, the grocer says.
.
The company is remodeling 10 more stores this year, but Lindstrom said the work doesn't stop when the makeover is done. "This is like a sand castle. It's beautiful day one, day two it starts to fall apart. To communicate that to an organization of 10,000 people, and in some cases a million people, is pretty hard. It has to go through the system."
.....

The company's hiring pool has also changed. "If we can go look, for example, at local schools of arts, schools of theater, let's go find some folks who can go through and play the role and actually take care of our guests, and we can teach them the grocery industry," Lowe said.
retailers  grocery  supermarkets  branding  Lowes_Foods  digital_media  shopping_experience  web_video  contra-Amazon  experiential_marketing  e-commerce  Amazon  Disney  theme_parks  in-store 
july 2014 by jerryking
Amazon Absorbing Price Fight Punches - NYTimes.com
JUNE 1, 2014 | NYT | David Carr.

Hachette Book Group, one of the big Manhattan publishers, has taken on Amazon in a bitter dispute over pricing. Hachette is suffering big losses because Amazon is delaying delivery of Hachette titles while also eliminating discounts. (Its authors are getting clobbered in the process.) Amazon is taking a reputational hit for not putting its customers first, which has long been its guiding philosophy.
David_Carr  Amazon  books  publishing  Hachette  pricing  contra-Amazon 
june 2014 by jerryking
Loblaw plans to battle Amazon and Wal-Mart with online food operation - The Globe and Mail
MARINA STRAUSS - RETAILING REPORTER
TORONTO — The Globe and Mail
Published Thursday, May. 01 2014,

Food e-commerce is one of the last frontiers of online retailing in Canada – a tough sector to penetrate because of the added costs of keeping food fresh and handling a lot of low-cost bulky items, from canned pop to soup.
Loblaws  e-commerce  Marina_Strauss  AmazonFresh  fresh_produce  retailers  Wal-Mart  Amazon  contra-Amazon 
may 2014 by jerryking
Amazon's Greatest Weapon: Jeff Bezos's Paranoia - WSJ.com
Nov. 13, 2013 | WSJ | By Farhad Manjoo.

What could Mr. Bezos possibly have to fear? Impermanence. Mr. Bezos is in an industry, retail sales, in which every innovation is instantly pored over and copied, in which (thanks partly to him) margins are constantly driven to zero, and in which customers are governed by passing fancy and whim. Being online confers fantastic advantages to Amazon, but it also comes at a deep cost: Very little about its business is burned into customers' minds.

Hence, frenzy: Amazon is in a race to embed itself into the fabric of world-wide commerce in a way that would make it indispensable to everyone's shopping habits—and to do so before its rivals wise up to its plans
Amazon  contra-Amazon  e-commerce  Fedex  habits  impermanence  Jeff_Bezos  network_effects  paranoia  retailers  shopping_experience  speed  staying_hungry  tradeoffs  transient  UPS  USPS  whims  shopping_habits 
november 2013 by jerryking

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